Ingenia Communities Group · ASX:INA
Ingenia Communities — FY2013 Earnings Presentation
49 slides from Ingenia Communities's earnings presentation, Aug 27, 2013
Slide 1: 2013 Annual Results Presentation
Ingenia Communities Group For personal use only 2013 Annual Results Presentation 27 August 2013 Strengthening with every step
Slide 2: Agenda
Agenda For personal use only Year in review p3 Highlights p5 Our operating environment p6 Strategy p7 Group overview p12 Key financials p14 Capital management p18 Portfolio update p21 Outlook p29 Appendices p31 p2
Slide 3: Year in review: Focusing on a diversified Australian platform
Year in review Focusing on a diversified Australian platform For personal use only FY13 Highlights Establishing our Australian foothold with a more diversified earnings base of 44 assets Successful entry into Manufactured Home Estate NZ Students Allocation by asset value Proforma position (post (M
Slide 4: MHE acquisitions and development pipeline to drive earnings growth
Year in review MHE acquisitions and development pipeline to drive earnings growth For personal use only Rapid expansion of a scalable, high yielding Valuable development pipeline embedded within portfolio MHE platform, six in NSW to date Summary No. of Expected No. of Target (as at 13 Aug 2013)1 vil
Slide 5: Highlights
Highlights Solid progress in building a leading seniors living business For personal use only > Garden Villages Rental occupancy continues to improve closing at 85%. Cash earnings up $0.7m from OPERATIONS prior comparative period > Settlers DMF Conversion sales up 52% in 2H13 – achieving full year s
Slide 6: Our operating environment
Our operating environment Market conditions improving with limited new supply For personal use only > Demand solid as residential property markets firm > Affordable segment of market very strong – seniors selling homes to first home buyers who are very DEMAND sensitive to falling interest rates > Re
Slide 7: Strategy
Strategy For personal use only Construction underway for Stage 2 development at Settlers Ridge Estate, Maitland NSW p7
Slide 8: Group strategy
Group strategy Delivering on strategy with seamless execution For personal use only Operate with excellence > Drive performance by increasing sales and occupancies > Target affordable market – limited competition > Recruit and retain industry leading talent > Leverage scale efficiencies from cluster
Slide 9: MHE strategy
MHE strategy An accretive, cash yielding extension to Ingenia’s business For personal use only > Manufactured Home Estates are a key component of Ingenia’s growth moving forward: • High quality recurrent cash yields; • Low risk and capital light development margins; • Expands Ingenia’s affordable ho
Slide 10: MHE strategy: Delivering on-strategy acquisitions
MHE strategy Delivering on-strategy acquisitions at attractive returns For personal use only Five on-strategy MHE acquisitions funded by recent placement and existing debt facilities almost complete $30 million institutional placement and Group debt and cash Nepean Albury Citygate Mudgee Val
Slide 11: Development
Development Significant low risks village expansion pipeline now in place For personal use only Development pipeline within existing portfolios as at 22 August 2013 Completion No. of Value ($m) Units FY14 FY15 FY16 FY17+ Medium Active Development term target Traditional DMF Ridge Estate, NSW $9.2 29
Slide 12: Group overview
Group overview Rapidly growing affordable seniors living business For personal use only EXISTING OPERATIONS (AS AT 30 JUNE 2013) Garden Villages Rental NZ Students (discontinued operations) > 29 properties across Australia > 3 student accommodation buildings in > A$99.7 million book value Wellington
Slide 13: Group overview as at August 2013
Group overview as at 20 August 2013 For personal use only Security price / NAV Security price performance versus Index 42 195% INA outperforming 38 the Index NAV x 175% x x 34 155% Cents 30 26 135% Security price now trading 22 at premium to NAV 115% 18 95% 29 Jun 12 28 Sep 12 02 Jan 13 08 Apr 13 10
Slide 14: Key financials
Key financials For personal use only Residents playing outdoor chess at Settlers Forest Lake, QLD p14
Slide 15: Earnings subscale but growing – solid cashflow
Key financials Earnings subscale but growing – solid cashflow For personal use only Key financial metrics 30 June 2013 30 June 2012 Net profit / (loss) $m (10.3) 131% 33.6 Profit from continuing operations $m 2.8 95% 1.4 Operating income – continuing operations1 $m 3.3 63% 2.1 Operating income - tot
Slide 16: Operating income to net profit reconciliation
Key financials Operating income to net profit reconciliation For personal use only 15.0 0.8 6.6 10.0 5.9 5.0 $m 0.0 Operating Gain on sale of Derivatives US FCTR reclass Change in fair Disposal costs Unrealised net Amortisation of Net loss income US Seniors value of of discontinued FX loss intangibl
Slide 17: Net Asset Value (NAV)
Key financials Net Asset Value (NAV) For personal use only Cents per security 40.0 34.4¢ (0.1) 1.5 (1.0) 1.3 (1.0) 34.3 (0.6) 34.4 35.0 30.0 3.0 NZ Students (9%) 2.6 US Escrows (8%) 25.0 1.2 RE Assets (3%) 5.8 Active Lifestyle Estates (17%) 8.9 Settlers (26%) 12.9 Garden Villages (38%) 20.0 15.0 1/0
Slide 18: Capital management
Capital management For personal use only Settlers Ridge Estate (Maitland NSW) Open Day – showcasing Stage 2 development p18
Slide 19: Renegotiated funding lowers cost and improves flexibility
Capital management Renegotiated funding lowers cost and improves flexibility For personal use only > Refinance of NZ debt facility executed with funding secured until 31 July 2018 at lower margins > Australian core debt term renegotiated including reduced restrictions on acquisitions and development
Slide 20: Balancing growth and distributions
Capital management Balancing growth and distributions For personal use only A successful and oversubscribed first capital raising for Ingenia > Institutional Placement at $0.32 per security (3.2% discount to 5-day VWAP) raised $21.2 million in Jun 2013 > Security price currently trading at a 19% gai
Slide 21: Portfolio update
Portfolio update For personal use only High quality tourist cabins at Nepean River Holiday Village, Penrith NSW p21
Slide 22: A diverse portfolio dominated by cash yielding assets
Portfolio update A diverse portfolio dominated by cash yielding assets For personal use only Today, Ingenia has Australian 44 communities and growing Rental Deferred 29 villages Management Fee > 1,520 units 9 villages > In all States except > 950 units ACT and SA > WA, QLD and NSW > Five villages wi
Slide 23: Increasing emphasis on cash yielding assets
Portfolio update Increasing emphasis on cash yielding assets For personal use only Geographical allocation by value Geographical allocation by value Proforma as at 30 June 2013 position (post MHE acquisitions)1 NZ Students NZ Students, 14% 16% Australian Australian Rental, 40% Rental, 44% Australian
Slide 24: Garden Villages (Rental)
Garden Villages (Rental) Occupancy growth and acquisitions drive earnings growth For personal use only KEY DATA KEY ACTIVITIES OVER 12 MONTHS FY13 FY12 > Portfolio continues to trend upwards to long term target of 90% Total properties 29 26 with occupancy closing at 85% at 30 June 2013 Total units:
Slide 25: Garden Villages: Ingenia home care packages
Garden Villages (Rental) Facilitating the delivery of Ingenia home care packages For personal use only No. of Care packages and Residential places1 Strategy > In FY13 we had 291 resident departures in our rental Over the past 5 years, the rate of care packages villages - the single biggest reason (3
Slide 26: Settlers Lifestyle (DMF)
Settlers Lifestyle (DMF) Focus on low risk expansion of existing communities For personal use only KEY DATA KEY ACTIVITY OVER 12 MONTHS FY13 FY12 > Strong second half performance in conversion sales with 32 Total properties: 9 7 settlements achieved, grossing $5.5 million (compared to 21 settlements
Slide 27: Active Lifestyle Estates
Active Lifestyle Estates Key drivers of earnings growth For personal use only KEY DATA KEY ACTIVITY OVER 12 MONTHS FY131 > Efficiently acquired and integrated a leading NSW portfolio of MHEs Total properties: 2 > Positive response to marketing activities in the Morisset local community has facilitat
Slide 28: Overseas portfolio
Overseas portfolio Commence sale process in early 2014 For personal use only NZ Students (Wellington, NZ) – Classified as discontinued operations > A valuable cash yielding portfolio with 15-year anchor leases to quality government backed tenants > Leases directly with VUW and Weltec complete Ingeni
Slide 29: Outlook
Outlook For personal use only Ingenia is committed to operating and building a highly profitable, diversified Australian seniors living portfolio focused on the cash yielding affordable segment of the market Ettalong Beach Holiday Village, Ettalong Beach, NSW p29
Slide 30: Outlook
Outlook Recent MHE acquisitions will drive earnings and development For personal use only > Dedicated acquisitions team currently assessing a significant pipeline of accretive off-market MHE opportunities > Acquiring and developing a market leading MHE portfolio in NSW and commencing assessment of n
Slide 31: Appendices
Appendices For personal use only Residents strolling by Ettalong Beach, 1.5km from Ettalong Beach Holiday Village, NSW p31
Slide 32: Building a leading position in key NSW markets
Appendix 1 Building a leading position in key NSW markets For personal use only Cluster strategy provides increased customer coverage at multiple price points whilst driving operational efficiencies Central West NSW • Dubbo Gardens • Wheelers Gardens, Dubbo • Peel River Gardens, Tamworth • Mudgee To
Slide 33: Investing in MHEs
Appendix 2 Investing in MHEs For personal use only Stringent Acquisition Criteria Considered Multiple Value Extraction Levers in MHEs Area Metrics Increase ground lease rental on existing sites Appropriate land size (minimum 2.5 ha) Buyback and upgrade pre-loved homes for new sale Proximity
Slide 34: Recent MHE acquisitions post FY13
Appendix 3 Recent MHE acquisitions post FY13 For personal use only Ingenia extends its cluster style strategy with accretive MHEs Estate Size Purchase Earnings Comment Price contribution (p.a) on stabilised occupancy Nepean River Holiday Permanent homes: 101 $10.0m $1.3-$1.5m plus Highly accretive c
Slide 35: Competitive landscape: MHE and Tourism Parks
Appendix 4 Competitive landscape: MHE and Tourism Parks For personal use only > The MHE and Tourism Parks Industry is highly fragmented, where majority of the parks are family owned and run > There is a general lack of sector corporatisation as assets are generally tightly held and rarely come to ma
Slide 36: Seniors living market landscape
Appendix 5 Seniors living market landscape For personal use only Australia’s Ageing Projections, Aged over 55s Australia’s Ageing Projections, Aged over 55s and over 70s 2010 – 2050 1 2011 – 20301 160% increase in Ingenia’s market The smaller opportunity 16 market of DMF and rental Over 55+ Millions
Slide 37: Operating income
Appendix 6 Operating income For personal use only FY13 FY12 Operating income (A$m) (A$m) Comments Continuing operations Australian Seniors - Garden Villages 7.7 7.0 Growing contribution from higher occupancy and 5 rental acquisitions - Settlers Lifestyle 5.6 5.5 In line with prior year due to slower
Slide 38: Balance sheet
Appendix 7 Balance sheet For personal use only Australian NZ Total Adjustments1 Total Balance sheet Seniors Students Balance Sheet Statutory (A$m) Balance Sheet Cash 38,531 974 39,505 (974) 38,531 Investment property and property under development 370,931 35,343 406,274 (35,343) 370,931 Other assets
Slide 39: Cashflow in detail
Appendix 8 Cashflow in detail For personal use only Cashflow Amount A$m Opening cash at 1 July 2012 32.8 Cashflow generated from operations: Continuing Operations 14.9 Discontinuing Operations 2.9 Net borrowing costs paid (6.5) Income tax paid (0.1) Net Cashflows from Operations 11.2 Acquisitions of
Slide 40: Higher cost base reflective of growth
Appendix 9 Higher cost base reflective of growth For personal use only FY13 FY13 Operating costs (actual) (indicative) $m $m Corporate (Sydney) Corporate office 2.9 2.6 Executives remuneration, finance, investor relations (staff, legal fees, office costs, travel) Board fees 0.3 0.3 Directors fees Re
Slide 41: Debt facilities
Appendix 10 Debt facilities For personal use only Australian Debt NZ Debt NZ Debt Commentary for (Core facility) (Development facility) 1 1 NZ Debt Core facility margin: 1.25% Limit ($m) Revolver A$82.0m NZ$20.8m NZ$11.9m Development facility margin: 1.5% (reducing to 1.25% on conversion to core deb
Slide 42: Valuations summary
Appendix 11 Valuations summary For personal use only 30 Jun 13 30 Jun 12 Movement Movement 30 Jun 13 30 Jun 12 Valuations Valuation Valuation Cap rate/ Cap rate / Key drivers of valuation movement ($m) ($m) ($m) (%) Discount Discount rate1 rate1 (%) (%) Garden Villages 99.7 87.1 12.6 14.5 9.6 10.1 •
Slide 43: Portfolio statistics: Garden Villages (Rental)
Appendix 12 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value Occupancy Occupancy Property Name Location 30 Jun 2013 (A$m) Cap Rate Total Units 30 Jun 2013 30 Jun 2012 Western Australia Swan View Gardens Swan View, WA 5.8 10.3% 72 100% 96% Yakamia Gardens Yakamia, WA 2.
Slide 44: Portfolio statistics: Garden Villages (Rental)
Appendix 13 Portfolio statistics: Garden Villages (Rental) For personal use only Book Value Occupancy Occupancy Property Name Location 30 Jun 2013 (A$m) Cap Rate Total Units 30 Jun 2013 30 Jun 2012 Victoria Grovedale Gardens Grovedale, VIC 4.1 10.5% 51 98% 88% St Albans Park Gardens St Albans Park,
Slide 45: Portfolio statistics: Settlers (DMF)
Appendix 14 Portfolio statistics: Settlers (DMF) For personal use only Book Value Occupancy Occupancy Property Name Location 30 Jun 2013 (A$m) Discount Rate Total Units 30 Jun 2013 30 Jun 2012 Traditional DMF Villages Lakeside Ravenswood, WA 24.0 13.5% 234 96% 93% Ridgewood Rise Ridgewood, WA 18.8 1
Slide 46: Portfolio statistics: Active Lifestyle Estates (MHEs)
Appendix 15 Portfolio statistics: Active Lifestyle Estates (MHEs) For personal use only Book Value Occupancy Property Name Location 30 Jun 2013 (A$m) Cap Rate Total Sites 30 June 2013 Manufactured Home Estates The Grange Morrisett, NSW 11.1 10.0% 145 99% Ettalong Beach Ettalong, NSW 2.3 18.4% 85 100
Slide 47: Portfolio statistics: Offshore assets
Appendix 16 Portfolio statistics: Offshore assets For personal use only Book Value Book Value Book Value “as complete” 30 June 2013 30 June 2013 Cap Rate Property Name Location (NZ$m) (NZ$m) (A$m)1 “as complete” NZ Students assets Cumberland House Wellington, NZ 16.4 15.4 13.0 7.8% Education House W
Slide 48: Settlers (DMF) sales
Appendix 17 Settlers (DMF) sales For personal use only Traditional DMF DMF Conversions WA QLD NSW QLD NSW Lakeside Meadow Ridgewood Noyea Ridge Rock- Forest Gladstone Cessnock Total Springs Rise (strata) Estate hampton Lake 12 months to 30 Jun 2013 No. of new sales 4 1 3 - 4 24 10 13 6 65 Average ne
Slide 49: Disclaimer
Disclaimer For personal use only This presentation was prepared by Ingenia Communities Holdings Limited (ACN 154 444 925) and Ingenia Communities RE Limited (ACN 154 565 990) as responsible entity for Ingenia Communities Fund (ARSN 107 459 576) and Ingenia Communities Management Trust (ARSN 122 928
Ingenia Communities Group — FY2013 Earnings Presentation on 6ix